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[Hardware] Answers CIMA CIMAPRA19-F03-1 Real Questions, CIMAPRA19-F03-1 Certificate Exam

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【Hardware】 Answers CIMA CIMAPRA19-F03-1 Real Questions, CIMAPRA19-F03-1 Certificate Exam

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CIMA F3 Financial Strategy Sample Questions (Q369-Q374):NEW QUESTION # 369
Company H is considering the valuation of an unlisted company which it hopes to acquire.
It has obtained the target company's financial statements.
Company H has been advised that the book value of net assets as shown in the financial statements of the target company does not provide a reliable indicator of their true value.
Advise the Board of Directors which of the following THREE statements are disadvantages of the net asset basis of valuation?
  • A. The net book value of current assets is normally a reliable indicator of their realisable value.
  • B. The net book value of assets is merely a record of past transactions which complies with accounting conventions.
  • C. The net realisable value is usually different from the net book value shown in the financial statements.
  • D. The net book value of assets can be obtained from the financial statements.
  • E. Intangible assets are often not shown in the company's financial statements.
Answer: B,C,E

NEW QUESTION # 370
An all equity financed company reported earnings for the year ending 31 December 20X1 of $8 million.
One of its financial objectives is to increase earnings by 5% each year.
In the year ending 31 December 20X2 it financed a project by issuing a bond with a $1 million nominal value and a coupon rate of 4%.
The company pays corporate income tax at 20%.
If the company is to achieve its earnings target for the year ending 31 December 20X2, what is the minimum operating profit (profit before interest and tax) that it must achieve?
  • A. $10.50 million
  • B. $6.69 million
  • C. $8.40 million
  • D. $10.54 million
Answer: D

NEW QUESTION # 371
Company M plans to bid for Company J. Company M has 20 million shares in issue and a current share price of $10.00 before publicly announcing the planned takeover. Company J has 10 million shares in issue and a current share price of $4.00.
The directors of Company M are considering an all-share bid of 1 Company M shares for 2 Company J shares.
Synergies worth $20m are expected from the acquisition.
What is the likely change in wealth for Company M's shareholders (in total) if the bid is accepted?
Give your answer to the nearest $ million.
$ ? million
  • A. 0
  • B. 1
Answer: B

NEW QUESTION # 372
Company S is planning to acquire Company T.
The shareholders in Company T will receive new shares in Company S in an all-share consideration.
Relevant information:

The shareholders in Company T want sufficient shares to receive a 25% premium on the pre-acquisition value of their shares, based on the pre-acquisition share price.
Which of the following share-for-share offers will achieve the desired result?
  • A. 1 share in Company S for 2 shares in Company T
  • B. 10 shares in Company S for 4 shares in Company T
  • C. 2 shares in Company S for 1 share in Company T
  • D. 1 share in Company S for 1 share in Company T
Answer: D

NEW QUESTION # 373
A company gas a large cash balance but its directors have been unable to identify any positive NPV projects to invest in.
Which THREE of the following are advantages of a share repurchase, compared with a one-off large dividend?
  • A. It means that the company will be able to pay lower total dividends in the future.
  • B. It will not create an expectation for future increased dividends.
  • C. It increases the number of shares issue.
  • D. The shareholder can choose whether to take the cast or not.
  • E. It returns cash to shareholders so that they can choose hew to spend It
Answer: A,B,D
Explanation:
A). The shareholder can choose whether to take the cash or not.
With a repurchase, shareholders can decide to sell (take cash) or keep their shares. A one-off dividend forces all shareholders to receive cash.
C). It means that the company will be able to pay lower total dividends in the future.
After a buyback there are fewer shares in issue. If the company keeps the same dividend per share, the total dividend outlay falls - good for future cash flow and flexibility.
E). It will not create an expectation for future increased dividends.
A large one-off dividend may be interpreted as a permanent increase, creating pressure to maintain higher payouts. A buyback is seen as a more one-off, discretionary event, so it avoids that expectation.
B is wrong: a repurchase reduces, not increases, shares in issue.
D is not an advantage relative to a dividend - both methods return cash that shareholders can spend as they wish.

NEW QUESTION # 374
......
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